Arrow Industries employs a standard cost system in which direct materials inventory is carried at standard cost. Arrow has established the following standards for the direct costs of one unit of product.

During May, Arrow purchased 160,000 kilograms of direct material at a total cost of $304,000. The total factory wages for May were $42,000, 90 percent of which were for direct labor. Arrow manufactured 19,000 units of product during May using 142,500 kilograms of direct material and 5,000 direct labor hours.

a. Calculate the direct materials price variance for May.

b. Calculate the direct materials quantity variance for May.

c. Calculate the direct labor rate variance for May.

d. Calculate the direct labor efficiency variance for May.

e. The production manager’s bonus is based, in part, on the direct labor variance and the direct material quantity variance. The manager’s bonus is adjusted (increased or decreased) by 10 percent of the direct labor variance and the direct material quantity variance. What is the impact of the variances on the manager’s. 

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Direct materials Direct labor Standard Quantity 8 kilograms 0.25 hour Standard Standard Price Cost $1.80 per kilogram $14.40 $8.00 per hour 2.00 $16.40